Media Release
Reserves not in doubt say Solid Energy
3 March 2005
Reserves of coal in the Waikato are not in doubt, but the cost of extracting some of them are says Solid Energy's CEO.
Dr Don Elder was commenting on today's announcement from power company Genesis that it was putting plans to build two coal-fired generators at Huntly on hold, blaming constraints in recoverable reserves of coal.
"The issue here is about prices. Our reserves estimates have not changed. We have always said there are 200-300 million tonnes of coal in the Waikato, and we stand by that."
Dr Elder says that Solid Energy recently completed work to rank each individual coal reserve in the Waikato into a priority order, from most easily recovered to the hardest and most expensive.
"We shared this information with Genesis. At today's electricity prices they are only comfortable with buying 50 million tonnes of our coal - the coal that is most easily recoverable."
Dr Elder said that to recover more of the reserves, there were issues that had to be worked through.
"These include, for example, the location of current and planned state highways. Resolving them will naturally add cost."
"Genesis has taken the view that as of today they are not prepared to pay the higher prices for additional tranches of coal. However, I note in their statement that they are only putting these power stations on hold, not cancelling them. As electricity prices rises, they may well revisit the issue of using more Waikato coal for generation, as indeed may other power companies."
"The physical amount of coal has not disappeared. The issue is the amount of coal people want will always be governed by the end price of electricity, " he said.
These are matters that we will be looking forward addressing in on-going discussions with Genesis. says Dr Elder.
On the question of CO2 capture and storage, Dr Elder noted that Genesis and Solid Energy were both partners in the same sequestration research project.
"We are both of the view that CO2 capture and storage will be commercially feasible but that it will take time to arrive at that point. " he said.
For further information contact
Vicki Blyth,
Communications Director,
Solid Energy New Zealand Ltd,
Phone 03 345 6000,
Mobile 021 670 250,
Email vicki.blyth@solidenergy.co.nz
